LONDON — The death of King Abdullah of Saudi Arabia early Friday is unlikely to deter the desert kingdom from maintaining a high level of oil production despite the recent sharp drop in prices, analysts said.
Saudi Arabia’s policy results from a consensus of the kingdom’s leadership and energy experts, and it will not be easy to abandon, longtime observers of Saudi Arabia say.
“There is no near-term reason to modify the kingdom’s position,” said Sadad al-Husseini, a former executive vice president and board member of Saudi Aramco, the national oil company, in a telephone interview.
Mr. Husseini, who now runs his own energy consulting firm, noted that Saudi Arabia had only fully detailed its position to maintain its oil production quota at a November meeting of OPEC in Vienna and that it was likely to wait for at least several months to see how the policy played out.
“The kingdom is unlikely to reverse a policy that it has just announced with the outcome still evolving,” he said.
The new ruler, King Salman, who was crown prince and a brother of Abdullah, said in a televised address on Friday that the kingdom would not change course and would maintain “the correct policies which Saudi Arabia has followed since its establishment.” This month, Salman seemed to endorse the current oil policies in a speech given on behalf of his brother.
The price of Brent crude, the international benchmark, rose nearly 2 percent to $49.45 a barrel in morning trading, reflecting uncertainty among traders about the continuity of Saudi policy. But the market erased much of those gains after the new king said that policy would remain unchanged. Prices have fallen about 60 percent since June amid a glut of production and slowing global demand.
During a long career as governor of Riyadh Province, the new king, who is 79, established a reputation as a conciliator among rival factions in the huge royal family, but he has experienced bouts of poor health in recent years. Simon Henderson, a Middle East analyst at the Washington Institute for Near East Policy, said it was most likely that the reins of power, including over oil policy, would be held by a group of advisers now forming around the king.
“Now that he is older, he is likely to take a more hands-off approach, relying on a coterie of advisers, which will probably include several of his sons,” said Mr. Henderson, who has written extensively on Saudi succession issues.
Salman moved quickly on Friday to begin forming that inner circle. He promoted his son Mohammad bin Abdul Aziz bin Salman as chief of the royal court and private adviser, replacing Abdullah’s chief adviser, Khalid al-Tuwaijri. The king’s son is likely to be a central figure along with another son Abdel Aziz, who is a senior official in the oil ministry.
Ali al-Naimi, who has been the kingdom’s oil minister for 19 years and has been the chief proponent of Saudi Arabia’s policy of maintaining market share, will remain in that position, according to the official Saudi Press Agency.
So far, the Saudis and other Persian Gulf producers appear convinced that their cutting production in an oversupplied market would only benefit other producers. A long, stable period of relatively high prices has led producers, mostly outside OPEC, to make huge investments in high cost endeavors like Canadian heavy oil projects and deepwater fields in Brazil, as well as the shale projects that have greatly increased production in the United States.
The Saudi and Gulf position is that it will take time for a shakeout to occur among oil producers, which may eventually leave low-cost producers in the Middle East in a stronger position.
“We expect the Saudi oil policy to remain consistent under King Salman,” said Richard Mallinson, an analyst at Energy Aspects, a market research firm in London, in an email to clients on Friday.
“While it would be within his power to make dramatic changes and reverse the current policy, there are no indications at present that he might do so,” Mr. Mallinson said. “Saudi Arabia is almost certain to remain focused on the long-term and its future position in the global oil market.”
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